June 2012: Economic sentiment remains stable in the EU and declines in the euro area

Brussels, 28 June 2012 - The Economic Sentiment Indicator (ESI) remained unchanged, at 90.4, in June in the EU and decreased by 0.6 points in the euro area, to 89.9. Falling confidence in industry, services and, to a lesser extent, among consumers was counterbalanced or mitigated by increasing confidence in retail trade and construction. Among the largest Member States, sentiment worsened in France (-1.5), Germany (-1.4), Poland (-1.3) and, to some extent, the Netherlands (-0.3). By contrast, sentiment improved in the UK (+1.9), Spain (+1.0) and Italy (+0.9). The ESI is above its long-term average only in Germany.

Economic sentiment indicator (s.a.)

June EU: 90.4

Euro Area: 89.9

Confidence in industry declined in both the EU (-0.7) and the euro area (-1.3), based on a deterioration in managers' production expectations and their assessment of their companies' current level of overall order books. In both regions, the assessment of the adequacy of the current level of stocks of finished products remained broadly unchanged. Managers' assessment of their companies' past production and current level of export order books also deteriorated in both regions. Confidence in services fell in both the EU (-1.2) and, particularly, the euro area (-2.2), mirroring a deterioration in all three components: the assessment of the past business situation and past demand declined markedly in the euro area. In the EU the drop in the assessment of past demand was less pronounced. Also demand expectations deteriorated in both areas. After the sharp fall registered last month, confidence in retail trade rebounded in both the EU (+4.3) and the euro area (+3.2), due to a significant improvement in the perceived present and expected business situation. Retailers' assessment of the adequacy of the current volume of stocks improved too. Confidence also recovered in construction in both the EU (+1.5) and the euro area (+2.1) partly offsetting last month's decreases. Both managers' assessment of order books and employment expectations contributed to this recovery.

In both regions, employment plans were further revised down for industry and services, while they rose in retail trade and construction. At the same time, selling price expectations decreased significantly in all business sectors except construction.

Confidence among consumers declined slightly by 0.3 points in the EU and by 0.5 points in the euro area, based mainly on worsened expectations about the future general economic situation and increased unemployment fears in both regions. By contrast, consumers' expectations about of their own financial situation and their savings improved in both the EU and the euro area.

Confidence in financial services – not included in the ESI – decreased markedly in both the EU (-4.8) and the euro area (-2.6) due to significant decreases in demand expectations and the assessment of the past business situation. In the EU also the assessment of past demand deteriorated, while it remained broadly unchanged in the euro area.

Industrial confidence indicator (s.a.)

June EU: -12.0

EuroArea:12.7

Service confidence indicator (s.a.)

June EU: -7.4

Euro Area: -7.4

Consumer confidence indicator (s.a.)

June EU: -19.7

Euro Area: -19.8

Retail trade confidence indicator (s.a.)

June EU: -10.3

Euro Area: -14.9

Construction confidence indicator (s.a.)

June EU: -31.0

Euro Area: -28.1

Financial services confidence indicator (n.s.a.)

June EU: -4.8

Euro Area: -12.8

The next Business and Consumer Survey is due to be published on 30 July 2012.